SIP Interest Rate
SIP interest rate refers to the expected rate of return on investments made
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SIP Plan Benefits
Start SIP with as low as ₹1000
No hidden charges
Save upto ₹46,800 in Taxunder section 80C^
Zero LTCG Tax¶
Disciplined & worry-free investing
How SIP Interest Rates Work?
SIP return rates are linked to the performance of the underlying fund scheme. This means your returns can vary depending on market performance.
Here's how it works:
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Investment:
When you invest in a SIP, your money is invested in market-linked funds.
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Fund Performance:
The fund manager invests your money in various assets like stocks, bonds, or a combination of both.
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Returns:
The performance of these assets determines the fund's returns. If the assets perform well, the fund's value increases, and your investment grows. If they perform poorly, the value decreases, and your investment may shrink.
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Rupee Cost Averaging:
One of the benefits of SIPs is rupee cost averaging. This means you buy more units when the fund's price is low and fewer units when the price is high, potentially reducing your average cost over time.
- Insurance Companies
- Mutual Funds
|
Returns |
| Fund Name |
5 Years |
7 Years |
10 Years |
| SBI Life |
13.49% |
13.09% |
|
| HDFC Life |
19.5% |
15.82% |
|
| Axis Max Life |
22.7% |
22.12% |
|
| ICICI Prudential Life |
16.33% |
14.66% |
|
| Tata AIA Life |
29% |
23.3% |
|
| Bajaj Life |
17.55% |
14.25% |
|
| Birla Sun Life |
19.5% |
16.12% |
|
| PNB MetLife |
31.41% |
24.68% |
|
| Canara HSBC Life |
13.16% |
11.5% |
|
| Star Union Dai-ichi Life |
15.2% |
- |
|
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Last updated: Nov 2025
Factors Affecting SIP Interest Rates
SIPs do not have a fixed interest rate. Unlike traditional bank deposits, SIP return rate are not guaranteed and can vary depending on the fund's performance. You can check the best sip to invest on Policybazaar also. The factors that influence SIP return rate are:
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Market Performance:
The overall performance of the stock market or bond market significantly impacts your returns.
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Fund Selection:
Choosing a well-performing fund with a good track record is important.
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Investment Horizon:
The longer you invest, the more time your money has to grow through compounding.
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Fund Manager's Skill:
The skill and experience of the fund manager can influence the fund's performance.
SIP Calculator
Monthly Investment
₹22.4 L
Top Funds with High Returns (Past 7 Years)
13.13%
Equity Pension
15.9%
Opportunities Fund
19.1%
Pension Growth Super
13.34%
Opportunities Fund
21.1%
Multi Cap Fund
14.34%
Accelerator Mid-Cap Fund II
15.9%
Multiplier
14.8%
Frontline Equity Fund
18.41%
Pension Mid Cap Fund
11.31%
Equity II Fund
14.8%
US Equity Fund
15.17%
Growth Opportunities Plus Fund
11.81%
Equity Top 250 Fund
14.25%
Future Apex Fund
12.17%
Pension Dynamic Equity Fund
14.56%
Pension Enhanced Equity
Why are SIP Returns Not Fixed?
SIP (Systematic Investment Plan) returns are not fixed because they are directly linked to the performance of the underlying mutual fund, which in turn depends on market conditions and several other variables. Unlike fixed deposits or recurring deposits, where the rate of return is predetermined and guaranteed, SIPs invest in market-linked instruments like equities or debt securities, whose values fluctuate based on market dynamics.
Key reasons why SIP interest rate returns are not fixed include:
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Market Volatility:
The value of investments can rise or fall due to changes in financial markets. This means the returns from SIPs can vary significantly over time, depending on whether the markets are bullish or bearish.
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Investment Horizon:
The duration for which you remain invested impacts your returns. Longer investment periods generally allow for greater compounding and can help smooth out short-term market fluctuations, but do not guarantee a fixed rate.
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Fund Selection:
Different mutual funds have varying objectives, risk profiles, and management strategies. The performance of the chosen fund directly affects your SIP returns.
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No Guaranteed Returns:
Mutual funds, by their nature, do not promise fixed returns because their performance is subject to market risks and other economic factors.
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Rupee Cost Averaging:
SIPs benefit from rupee cost averaging, buying more units when prices are low and fewer when prices are high, but this only helps to average out costs, not fix returns.
Examples of SIP Returns
SIP returns can vary widely depending on the fund, market conditions, and investment period. Here are some illustrative examples:
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Long-Term Example:
If an investor started a monthly SIP of ₹10,000 in January 2008 and continued till January 2020 (12 years), the total investment would have been ₹14.5 lakh. By January 2020, the corpus could have grown to ₹28.1 lakh, equating to an annualized return of about 10.5%. However, during the market crash in March 2020, the same SIP value could have dropped to ₹17.6 lakh, reducing the annualized return to just 3%. This demonstrates how market volatility, especially near the end of the investment period, can significantly impact returns.
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Fund Performance Example:
Over different periods, SIP returns in equity mutual funds have historically ranged from 8% to 15% per annum, but these are not assured and can be higher or lower based on market cycles and fund performance.
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Calculation Method:
SIP returns are best measured using the XIRR (Extended Internal Rate of Return) method, which accounts for the timing and amount of each installment. For example, if an investor puts ₹10,000 monthly into a mutual fund for three years (total ₹3,60,000), the final value will depend on how the market performed during those 36 months. The XIRR method aggregates the returns of each instalment to provide a realistic annualized return figure.
These examples highlight that SIP returns are variable and depend on several factors, including market timing, investment duration, and fund choice. There is no fixed or guaranteed return in SIPs, making it essential for investors to have realistic expectations and a long-term perspective.
How to Estimate Returns on Your SIP Investments?
Calculating returns on your SIP (Systematic Investment Plan) investments is straightforward. The SIP calculator can simplify the calculations. An SIP calculator is a tool designed to help you estimate the future value of your investments in a Systematic Investment Plan (SIP). By inputting key information such as the monthly investment amount, duration of investment, and expected rate of return, the SIP calculator automatically computes the estimated returns and the final corpus you could accumulate by the end of the investment period.
Conclusion
The SIP interest rate plays an important role in shaping the outcome of your investments. While SIPs use the power of compounding and reduce risk through rupee cost averaging, the returns largely depend on market performance and the interest rate assumed. Monitoring and understanding the projected SIP interest rate is crucial to achieving long-term financial goals, allowing investors to adjust their investment strategies for better growth and returns.
FAQs
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What is a SIP interest rate?
SIPs (Systematic Investment Plans) don't have a fixed interest rate like traditional bank deposits. The returns on a SIP are linked to the performance of the underlying mutual fund, which can vary depending on market conditions.
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How are SIP return rates calculated?
SIP returns are calculated based on the performance of the market-linked fund in which you've invested. Factors like market fluctuations, fund manager's decisions, and the overall economic environment influence the returns.
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Can I guarantee a specific return on my SIP?
No, you cannot guarantee a specific return on a SIP. The returns are subject to market risk, and past performance is not indicative of future results.
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How do SIP returns compare to traditional investment options like bank fixed deposits?
SIPs offer higher potential returns than traditional fixed deposits, but they also come with higher risk. Fixed deposits have a guaranteed return, but the interest rates are usually lower than those offered by good-performing market-linked funds.
